Trade of the week: long New York sugar no.11
If a bullish ‘Hammer’ formation were to be formed on Monday and this were to be followed by a daily chart close above Monday’s high on Tuesday, we would like to go long NY no. 11 sugar front month futures.
(Video Transcript)
Short soyabeans still viable
Good morning and welcome to this week's trade of the week on Monday 4 December 2023. First of all, I'd like to apologise because last week I got my trade of the week mixed up with the trading the trend which we do on Wednesdays and basically talk to you about our long S&P 500 position.
But, actually, on 20 November 2023 on trade of the week we went short soyabeans and I didn't give you an update on that, so I'd like to do so now. Basically, we were short 1,367, we had a stop loss here just above the recent high in November and that trade is still ongoing.
It's in profit at the moment so what I would do is just lower my stop loss level to break even to just below your entry level so you don't lose any money on this trade if it were to revert to the upside. We still have our downside targets here around 1,300 in place and that trade is still ongoing.
Long gold trade worked a treat
Now last week we went long gold and we did so despite gold being overbought and basically the reasoning was that we wanted to see a daily chart close above the October high of $2,009 per troy ounce which we did see on Monday 27 November 2023.
Basically, we went long there with an upside target of $2,075 per troy ounce which was hit earlier today. It actually went quite a bit higher than that earlier this morning but since then has come back down again. So that trade also worked out extremely well.
Long sugar looks to be sweet
For this week what I would like to do is to go long sugar. Now the reason is purely technical and we must make sure though that we're not jumping the gun.
And what I'm seeing here at the moment is a potential bullish hammer formation where you have a small body, a long shadow to the downside which is at least three times longer than the body and then if on the next day you close on a daily chart closing basis above today's high.
So, on Tuesday we need to have a close above Monday's high if we see this hammer formation then you basically go long and it gives you a potential sharp reversal after this sharp decline that we've seen last week.
And from a risk-reward point of view it makes sense to trade this sort of setup even though it's against the short-term trend but as you can see here we're still trading in the direction of the medium-term trend because we've been rising since June of this year.
So, today's trade of the week is to go long sugar on a daily chart closing basis tomorrow on Tuesday above Monday's high if on Monday a bullish hammer formation was formed and we would do so with a stop loss at 2427 and an upside target around 2610.
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